Calafia Condos: One of the developments that never stopped construction

Calafia Condos: One of the developments that never stopped construction

With the collapse of the money markets on both sides of the border, it had become almost impossible –or so it seamed- for Baja developers to finish their projects.

Finding investors or financing for the final completion of their development seemed impossible. The financial situation in the U.S. did not make matters any better. Potential buyers stopped investing in Mexico because of the economy. Current buyers began to doubt the developers’ ability to complete their development. In the last few days –and weeks- however, we have seen a change.

Could it be the end of the bad times for the region? Here are some clues:

A beautiful development in the northern part of Rosarito. The Baja realtor community was elated last month, as news was coming in confirming that Naos had received approval for financing their construction. This will be an amazing beachfront development, consisting of approximately 300 oceanfront units, by prestige builders Central de Arquitectura, from México City. They expect to break ground shortly, and have completed their beautiful showroom.

The Residences
A luxury condo development with a hotel, at the Rosarito-Tijuana coastal corridor, by Las Vegas developer CDDG, has just received an approval for financing the rest of the construction from their original lender, Banorte Bank. As many developers, both in Mexico, the US and elsewhere in the world, they will be late on delivery, but they will deliver, and according to CDDG’s Michael Coskey, quality will be preserved. Banorte has also contracted with Ernst & Young to do a comprehensive market study in the area. Banorte Bank is one of the top three banks in Mexico and is highly supportive of Baja developments, as it sees a great future for the area.

La Elegancia
An oceanfront complex just south of Calafia Hotel. Consisting of 109 units, La Elegancia has a beautiful sandy beach, breathtaking views of the ocean and El Descanso Bay. Lots of amenities characterize this development, such as a meditation room, a movie theatre, roof-top swimming pool and much more. This development went trough a similar process as the Residences in terms of financing, and it is in the finishing stages with Banorte. Construction restarted July 13 and expects completion within 10-12 months. Around 65% of this spectacular project’s 109 units are sold.

Palacio del Mar
Located in the southern end of the Rosarito city limits, this large development is just about to complete their first tower, including most if not all amenities. The finishings in this complex are awesome. The second tower should be completed by next Summer.

First high-rise building in Ensenada. This beautiful tower is located at the entrance of Ensenada, a city also know as the “Pearl of the Pacific”. Comprised of luxury finishes and amenities, this great project is set to be completed before the end of the Summer. Just a few weeks after its scheduled date.

Calafia Condos
One of the developments that never stopped construction; the last tower of the three tower complex should be completed within 7 months.

Other projects are completed already, and working on the title and bank trusts to be ready for their buyers. Las Palmas, for example, is working hard with Banorte, to be able to find a mechanism to deliver title and bank trusts as soon as it is possible, as the project is just about done, but has not been able to provide trusts due to a complex, but manageable financing structure.

La Jolla del Mar also encountered the same problem as Las Palmas, but is already delivering title… albeit slowly, but is doing it.

Buyers patient?
Many property buyers are obviously eager to get into their units, as they want to enjoy the American dream –in Baja- as it is a beautiful place, with great people, and with a comfortable and very affordable cost of living. Of course, some buyers or investors are having financial problems in the US, and find it more difficult to continue committing to their investment in Baja. I hope all can be a bit more patient, and think of their oceanfront Baja investment, as your reward for all your hard work and suffering you have gone through!

It has been proven by the projects already completed that the quality of construction, finishes and amenities is top-of-line in Baja.

The truth is what visitors and buyers see when touring one of the stunning and gorgeous finished complexes, like the Rosarito Beach Condo Hotel, Palacio del Mar, La Jolla del Mar and many others. The developers and Banorte (Mexico’s financial institution) are making sure that this quality and workmanship will continue.

Still hard times ahead?
Most Americans have seen their 401ks and other portfolios and stocks diminished by the crisis. The global financial crisis of 2008–2009 began in July 2007 when a loss of confidence by investors in the value of securitized mortgages in the United States resulted in a liquidity crisis that prompted a substantial injection of capital into financial markets by the United States Federal Reserve, Bank of England and the European Central Bank. The TED spread, an indicator of perceived credit risk in the general economy, spiked up in July 2007, remained volatile for a year, then spiked even higher in September 2008, reaching a record 4.65% on October 10, 2008. In September 2008, the crisis deepened, as stock markets worldwide crashed and entered a period of high volatility, and a considerable number of banks, mortgage lenders and insurance companies failed in the following weeks.

Since March of this year, we have seen a steady improvement of data from financial markets, home builders, banks and manufacturing. These coming weeks should also give us an indicator, as there are many earnings reports due in the US. No recession lasts for more than 2 years… and this one is looks as it has reached the bottom… thus, things are looking better and better. The International Monetary Fund’s (IMF) projections for economic growth in North America are as follows:

In 2008 the US is expected to have a contraction of 2.6% of GDP, Canada is expected at 2.3 and Mexico at 7.3%
For 2010, the IMF expects to see growth in most of the world, and north America is no exception: it puts Mexico’s growth at 3.0%, the US at 0.8 and Canada 1.6
Still a great opportunity at the moment.

Sales price decreases
In California, Nevada and Arizona, three of the four worst hit states in the nation in regards to home sales and prices, home prices have declined around 38% from their 2006 peak. Now this is stabilizing, as numbers of sales have increased dramatically. However, if you look at oceanfront homes, there is a different story. Prices in this segment have declined an average of “only” 16%. Experts say something similar has happened in Mexico, where home prices have declined an average of 35% on ocean view homes and 25% for oceanfront.

Still though, an oceanfront condo in northern Baja for an average of $350,000 is a “bargain” and at a fraction of a similar one in La Jolla California -or other coastal California areas, at $2,500,000.00 according to market analysis.

Rents spike up
In the last few months, rents in the northern Baja corridor have increased spectacularly “we are sold out until the second week of September“ said Jose Lopez, a top rental professional in the area. “We are seeing people from all over coming to rent, Mexicali, San Diego, LA and many other places.” Many people are renting for the week, the month and for several months, up to a year. Renting has become so popular, that realty offices such as REMAX Baja have developed “Rent-to-own” programs, and have proven successful.

City Gets involved.
Baja’s northern corridor –Tijuana coastal, Rosarito and Ensenada- is experiencing an unprecedented urban renaissance. With more than 30 development projects completed, underway or in the pipeline, there is a new urgency to have a plan. Mayor Hugo Torres, preoccupied with this plus with the current situation of developments not being completed on time or not having title or Bank Trust, is forming a task force.

This task force is comprised of public/private individuals and organizations, led by a steering committee comprised of the Ampi Realtor Organization, CANADEVI Housing Chamber, City of Rosarito, Rosarito’s Urban Development Administration, Rosarito Convention & Visitors Bureau (COTUCO), Rosarito’s City attorney and others.

The main purpose of this task force is to assist and orientate the buyers and investors, as well as assist the developers and builders with lending institutions and information, prompt closings, and more.

Baby boomers will be retiring in droves! As a fact, Mexico is the NUMBER ONE destination for American retirees… it has all the qualities to continue with this trend.

Written by Gustavo Torres
Gustavo Torres is Vice-president of AMPI Realtors association in Rosarito Beach.

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